ANALYSIS: Why the creation of money by bankers can only create havoc…and why the legislators don’t care

PRETENDING THAT LEAD CAN BE TURNED INTO GOLD IS & ALWAYS WAS A FANTASY

Two weeks ago, the MP for Wycombe stood up to kick off the first Parliamentary debate about Money Creation for 170 years. The Chamber – which was already sitting only for back-bench business, and therefore 80% empty – abruptly became 95% empty as MPs wandered off to do more important things elsewhere. It says a lot about our contemporary Parliamentarians that they considered the defence of Rochester & Stroud (or a double in the Commons Bar) more important than the biggest single factor – after education – in the materialisation and depoliticisation of British society. (For my take on this, see the recent Slogpost here)

As for the Executive, not a single Treasury Minister was present. I can only assume that nobody fancied the job of trying to defend fractional reserve banking (FRB) although I also suspect that none of them giveAF what the People’s representatives have to say on the subject. The system is insane and fraudulent, but this reality applies across the developed world and beyond. Only last Friday, the Irish Central Bank discreetly suggested to Irish credit union leaders that, should any of their members be lucky enough to have €100,000 with a CU, they should transfer a sizeable proportion of it to another savings institution forthwith.

The extrapolation from this is obvious: the Government wants to limit as much as possible the amount it’ll have to pay out under EU deposit protection rules. What this doesn’t suggest is that Eire’s leaders are brimming over with confidence about the viability of CUs.

Intrinsically, the FRB construct (with a heavy emphasis on con) is designed to make every bank’s asset base look good, while at the same time shifting money that doesn’t exist into the investment sphere…and then the bonus pots that accrue therefrom. As it is based on bogus accounting that woefully underestimates the risk, sooner or later it is bound to go bang.

Sadly, it’s never the troughers at the top who go bang…or even to jail. No, it’s the ordinary citizenry who are suddenly – once all the money’s gone – held responsible and told “We’re all in this together”. They weren’t in the bonus pool of course, but let’s not get picky and go all NVE Commie about this. As I pointed out at the weekend, for every three euros Greece is trying to pay back, two of them are funny money that never existed in the first place. If you’ve been to Athens at all in the last two years, then you will see the social and economic carnage meted out to innocent Greeks by Troikanauts who know perfectly well that their demands are a scam.

You’ll probably also know that tourism is about the only thing that has kept the country upright since the pip-squeaking antics of the Troika began. Well, now the banker boys and Brussels have told the Samaras government to up VAT on tourist purchases/businesses. So check this out: in its determination to force repayment of non-existent money created by alchemy, the EC/IMF/bondholder axis of hogs insist on punching an enormous hole in the main Greek income pipeline.

Bear in mind, none of these seemingly random examples are really that at all: they all stem directly from a banking model whose accountancy methods are, ultimately, a licence to enforce financial repression. The globally universal nature of their power to keep things this way shows itself a dozen times every day: in Australia, Tony Abbott has been trying (not very hard, if we’re being honest) to introduce tougher rules for financial advisers….most of whom are in the banks’ pocket, whether they admit it or not. Now he’s already had to water the proposals down dramatically. Chairman of the Australian Securities and Investment Commission (ASIC) Greg Medcraft highlighted education and ethics as key to “the industry getting its house in order”. But already the banking lobby has forced the Treasury to scrap plans to do just that.

You see, for bankers it’s easy to talk about a level playing field if they’ve planted mines all over the place to blow up any customer lucky enough to be winning. But the ultimate lunacy of banking privilege is that we now see the European Union on the verge of collapse largely because of debt commitments….at least 35% of which aren’t real, with the banks themselves aiming a gun at their own temples via derivative paper swops overvalued roughly a hundredfold.

I’m no fan of the EU’s corrupt, neo-fascist and commercially dense rulers, but I’d rather the thing withered away in a measured fashion than collapsed overnight into a pit of anarchy – followed swiftly by an implosion in the banking business. Reform is one thing, sudden disaster is another. But then, if the perpetrators would rather have anything but reform, disaster will be the result.

They’ll all be in the gated condos high above the safe parts of town when it hits. The rest of us will, as always, be asked to pick up the pieces.

Yesterday at The Slog: Oil v Gold in a fight to the finish

Filed under: fractional reserve banking – Why the creation of money by bankers can only create havoc Tagged: Anarchy of sudden collapse serves no useful purpose, Commons debate on money creation, Irish credit unions wobbly?, Troika raises VAT in Greece